ZST Digital Networks, Inc.

CIK:0001403794|SEC Filings

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2011

NOTE 11 ─ EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net earnings per share for the periods as indicated:

	Nine Months Ended September 30,
	2010		2011
	(Unaudited)		(Unaudited)
Numerator:
Net income attributable to the common	$	13,583,304	$	19,830,167
Net income used in computing diluted earnings per share	$	13,583,304	$	19,830,167
Denominator:
Weighted average common shares outstanding – basic		11,650,442		11,595,477
Weighted average common share outstanding – diluted		11,650,442		11,595,477
Basic earnings per share	$	1.17	$	1.71
Diluted earnings per share	$	1.17	$	1.71

	Three Months Ended September 30,
	2010		2011

Numerator:
Net income attributable to the common	$	6,409,537	$	8,231,332
Net income used in computing diluted earnings per share	$	6,409,537	$	8,231,332
Denominator:
Weighted average common shares outstanding – basic		11,650,442		11,545,845
Weighted average common share outstanding – diluted		11,650,442		11,545,845
Basic earnings per share	$	0.55	$	0.71
Diluted earnings per share	$	0.55	$	0.71

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Net income	$ 19,830,167	$ 13,583,304
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	422,713	227,317
Stock-based compensation	514,709
Deferred tax assets	(728,070)
Changes in operating assets and liabilities:
Accounts receivable	(1,768,368)	(2,604,359)
Inventories	24,046	1,022,278
Advance to suppliers	6,171,748	7,249,152
Prepayment and other assets	(13,910)	830,152
Accounts payable		(712,445)
Accruals and other payable	4,821	(61,217)
Deferred revenue	3,865,237	1,261,952
Taxes payable	2,176,784	345,157
Net cash provided by operating activities	30,499,877	21,141,291
Cash flows from investing activities:
Additions to property, machinery, equipment and software	(751,706)	(1,736,041)
Cash flows from financing activities:
Repurchase of common stock	(491,713)
Effect of changes in foreign exchange rates	2,821,266	1,173,041
Net increase in cash and cash equivalents	32,077,724	20,578,291
Cash and cash equivalents, beginning of the period	23,702,457	13,627,992
Cash and cash equivalents, end of the period	55,780,181	34,206,283
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$ 6,089,724	$ 5,247,337

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 55,780,181	$ 23,702,457
Accounts receivable	35,279,855	33,490,510
Inventories	195,942	221,093
Advance to suppliers	875,002	7,270,379
Prepaid expenses and other receivable	1,003,120	1,019,629
Deferred tax assets	1,413,561	685,491
Total current assets	94,547,661	66,389,559
Property, machinery, equipment and software, net	10,928,536	10,544,051
Intangible asset	109,271	166,288
Total assets	105,585,468	77,099,898
Current liabilities:
Deferred revenue	6,484,525	2,741,964
Accruals and other payables	594,592	263,073
Accrued payroll and related expense	79,307	129,281
VAT payable	558,861	669,682
Franchise tax payable		170,000
Income tax payable	3,397,383	1,289,974
Total current liabilities	11,114,668	5,263,974
Equity:
Common stock $0.0001 par value, 100,000,000 shares authorized, 11,650,442 and 11,725,442 shares issued, and 11,625,542 and 11,505,943 shares outstanding	1,172	1,165
Additional paid-in capital	31,202,603	30,729,182
Treasury stock	(690,048)	(198,335)
Appropriated earnings	5,817,035	5,817,035
Retained earnings	53,188,531	33,358,364
Translation adjustment	4,951,507	2,128,513
Total equity	94,470,800	71,835,924
Total liabilities and equity	$ 105,585,468	$ 77,099,898